The crystal ball analysis for future African trade
The main feature of global trade since at least 2000 has been the relentless rise of exports from the BRIC countries (Brazil, Russia, India and China) and, in particular, China. Much of this increase has been at the expense of the European Union (EU) and to a lesser extent the United States of America (US), while Africa has slowly increased its share of global exports and imports. This BRIC growth has been most clearly seen in manufacturing exports and natural resource imports.
Are these trends going to continue? In this paper we use a computer model to assess likely trade trends through to the year 2025. Our economies of interest are Africa as a whole, South Africa, Kenya, Nigeria and Egypt, as we believe that this selection provides a solid base to forecast the 2025 trading patterns for Africa. These trends are firmly anchored in the trade patterns of recent years and rely on the most recently accepted global macroeconomic trends through to at least 2020 from the World Bank, the International Monetary Fund (IMF) and others. Using a computer model of the global economy ensures that we force consistency in these forecasts; meaning that changes in one area will force commensurate changes elsewhere in the global system. They are not therefore mere estimates presented in isolation from other developments in the global economy. We present our (IMF and others) macroeconomic assumptions of the immediate future for the world so that the reader may be able to see what is driving these changes, and indeed see how these macroeconomic changes are at the same time driving global trade flows in a simultaneous relationship.
Over the period to 2025 the global growth in BRIC dominance is likely to continue but at a slightly modified rate, with China driving these BRIC results. We can also expect similar increases in the shares for the rest of the world as we have defined it in this paper, with a commensurate decline in the trade performance from the EU and to a lesser extent the US. Africa is projected to continue its modest rise in the global importance of both exports and imports.
At the more detailed level intra-African trade is likely to increase faster than African global trade, both in aggregate and for many of the individual trade commodity sectors (and in our aggregate services sector). Of special interest to Africa is that its natural resources exports to the world are likely to grow at a slower rate than overall exports, while the Chinese domination of the TCF (textile, clothing and footwear) sectors is set to decline. There are also some bright glimmers of hope for many of the African manufacturing sectors, although much of this trade is off low bases.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.